NAS100 supported as Micron revives AI optimism but inflation update looms

NAS100 analysis

The rise of inference and Agentic AI is driving unprecedented demand for memory and storage, causing severe shortages, with memory chip makers emerging as a crucial part of the global semiconductor supply chain. Micron is not just any chip company but one of only three HBM makers globally, alongside South Korea's SK Hynix and Samsung.

Scarcity is creating pricing power, leading Micron to another record quarter. Sales accelerated 345.76% y/y in Q3 FY26 and GAAP gross margins widened to 84.6%. Crucially, management expects to maintain its eye-watering revenue growth momentum, with margins rising to new records of approximately 86%, while raising full-year FY26 capex to $27 billion. CEO Mehrotra said the company does "not have line of sight" as to when memory supply will catch up with demand, pointing to prolonged shortages. ^[1]

Micron's blockbuster results and guidance have restored confidence in the AI trade and revived optimism around chip demand. Micron has emerged as a top NAS100 performer this year and the upbeat report is helping the index recover, keeping it on track for new all-time highs.

Meanwhile, Wall Street sentiment continues to benefit from the IPO theme. After SpaceX began trading earlier this month, Micron's HBM rival SK Hynix plans a roughly $29 billion US listing as early as July ^[2]. At the same time, progress in US-Iran negotiations, which has seen traffic through the Strait of Hormuz pick up and oil prices drop, adds to the structural tailwinds.

However, the path higher will not be straightforward, leaving NAS100 vulnerable to pullbacks. Periodic bouts of AI-related anxiety are likely to persist against a lofty valuation, coupled with macro and geopolitical uncertainty. Despite the diplomatic breakthrough, the road to a lasting peace between the US and Iran appears bumpy and contentious.

Crucially, the Fed adopted a hawkish stance at its last meeting and markets now see a rate hike as early as September, with the higher-for-longer environment weighing on equities. Markets now look to today's PCE report. Any acceleration or broadening of inflationary pressures could cement tightening prospects, while signs of cooling would ease pressure on the Fed and support the stock market.